Structured Settlements

Written by Patricia Skinner
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The average consumer may be unaware of the type of transactions known as structured settlements. It is an expanding field of asset based cash structuring. Structured settlements typically pay a lump sum of cash for your right to receive payments over a period of years.

You can receive payments over a period of years from annuities, annuity-based instruments, and lotteries. What you are selling to the annuity buyer is not the annuity itself. You're selling your rights to collect the payments from the annuity over a period of years.

Lottery and Casino Winnings

It works the same way with a lottery, or a big casino winning. You know what happens - someone wins a million dollars, or more - but then it gets divided into yearly payments, sometimes over a period of twenty years. The annuity buyer buys the right to these yearly payments, and gives you in return the lump sum of cash.

Structured settlements can also be created for life insurance policies. These are known as viatical settlements, and the insuree forfeits the lump sum available after his death to his beneficiaries in exchange for up-front cash in the present. Annuity buyers are very similar to private mortgage note buyers, as they are both able to convert your ownership of a paper asset (your annuity, your mortgage) into cash.

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